The administration said the package could lift stock
prices by 10% and would create 2.1 million jobs in three years.
But the Democrats have already dismissed the measures
as financially irresponsible and "an illusion" designed to
favour the rich.
President Bush announced his plans in a speech to the
Economic Club of Chicago.
"We cannot be satisfied until every part of our
economy is healthy and vigorous," he said.
He noted the vital role played by consumer spending
in the US economy and said "there are warning signs I won't
"By speeding up the income tax cuts, we will
speed up the economic recovery and the pace of job creation.
"If tax relief is good enough for Americans
three years from now, it is good enough for Americans today."
News of the economic plan pushed the dollar higher
against other major world currencies. US shares moved modestly lower
following a substantial rise on Monday.
The US Treasury said the package was aimed at
encouraging consumer spending, promoting investment and helping the
GERMANY MUST SLASH DEFICIT, EU RULES
Germany has not cut spending as its economy slowed.
Germany must take action on its looming budget deficit by May 21 or face
punishment, the European Commission has warned.
The dressing-down from Brussels is being seen as a
humiliation for the government of Europe's largest economy but is not
expected to lead to any immediate financial penalty.
It comes at a difficult time for Germany, which is
suffering very low economic growth, high unemployment and the threat of
strikes by public sector workers.
In the second step of a formal "excessive
deficit procedure", the Commission called on EU finance ministers
to join it in piling pressure on Germany when they meet on January 21.
The procedure was launched in November, after
forecasts indicated that Germany's deficit for 2002 would expand to 3.8%
of annual economic output - way in excess of the 3% ceiling all eurozone
members have signed up to.
The Commission insists member states to keep
expenditure within limits, in order to bolster investor confidence in
And Germany was not the only country to incur the
displeasure of the Commission, with France and Italy both being warned
over their deficits.
In its latest judgement on Germany, the Commission
argued Berlin was to blame for overspending, which did not result from
any unforeseen external factor.
But EU monetary affairs commissioner Pedro Solbes
indicated any fining of Germany for breaching the so-called Stability
and Growth Pact was still some way off.
"The regulation of the treaty does not imply any
type of immediate fine," he said.
"There is a second recommendation and it is a
US CHIEF WARNS BRUSSELS OVER GM BAN
Support is growing in the US to escalate a dispute
with Brussels over genetically modified food, further straining
transatlantic relations over trade policy.
US Trade Representative Robert Zoellick said he
supported calls for action against the European Union over its
moratorium on genetically modified food products.
"I personally am now of the view that we need to
bring a case," Mr Zoellick said, urging that the EU be brought
before the World Trade Organisation.
And he said that his position was winning support in
"My sense was that there is pretty broad
agreement on this but I don't want to presume everybody else's
EUROZONE RATES LEFT UNCHANGED
The decision to keep the key rate on hold at 2.75%
had been widely expected following last month's hefty
That move, prompted by mounting fears over the
sluggish eurozone economy, followed more than a year of inaction on
rates by the European Central Bank, despite cuts enacted by other major
Europe's economy has shown increasing signs of
stagnation, but the ECB has kept rates relatively high to fight
inflation, which has remained persistently high.
DROUGHT WIDENS AUSTRALIAN TRADE DEFICIT
Australia's worst drought in a century has pushed its
trade deficit to its highest level in more than two years in November,
as agricultural exports falter.
The deficit has increased for 12 successive months
and is back over A$1bn (£359m; $576m) for the first time since August
Despite the drought, the government has maintained
its forecast for export growth this year.
"Given these figures, the government remains
confident that the mid-year economic and fiscal outlook forecast of
export growth of 2% in 2002/03 remains on track," said Deputy Prime
Minister John Anderson.
"These figures point clearly to the continued
strength of the Australian economy relative to our key trading partners,
at the same time as the continuing importance of agriculture to the
national economy," he said.
HONG KONG 'MUST ECONOMISE'
Hong Kong Chief Executive Tung Chee-hwa has warned
that taxes will rise and government spending will be cut, as the
territory struggles to ride out an economic slump.
In his annual policy speech, Mr Tung said Hong Kong's
budget deficit was threatening to damage its economy, and that mending
it was his "top priority".
"The economic situation we are facing is severe
and unprecedented in decades," Mr Tung said, adding that he saw no
indication of an end to more than four years of debilitating deflation.
The territory's budget deficit could exceed 70bn Hong
Kong dollars (£5.6bn; $9bn) this year, Mr Tung said — mainly because
public expenditure has been rising steadily.
VENEZUELAN BANK STRIKE HITS CURRENCY
Venezuela's currency has lost further ground, as bank
staff joined the five-week-old general strike in opposition to President
The bolivar ended down 5.3% against the US dollar on
Thursday, closing at a rate of 1,594.75 to US$1, as measured by a
central bank average.
IMF PITCHES DEAL FOR BANKRUPT COUNTRIES
The International Monetary Fund (IMF) has published
detailed proposals for dealing with countries facing unsustainable
The idea is an international legal procedure that
would enable countries to suspend debt repayments while they negotiate
more manageable terms with their lenders.
The proposal is intended to deal with crises faced by
governments in repaying debts owed to the private sector.
IMF officials feel that such situations end too
frequently with a disorderly default that harms the population of the
country concerned, the creditors who don't get paid and causes
instability in international financial markets.
N KOREA AGREES TO TALKS WITH SEOUL
North Korea has agreed to hold talks with the South
Korean Government, at which Seoul says it will put pressure on the North
over its nuclear programme.
The meeting will be the latest in a series of
rapprochement talks between the two sides since their historic summit in
2000, but the BBC correspondent in Seoul says the timing is highly
significant. The ministerial-level meeting will be the first since North
Korea began reactivating a nuclear plant, which is believed to be
capable of producing weapons-grade plutonium.
German unemployment has hit a new four-year high,
with another 28,000 people joining the more than four million jobless in
The number of people looking for work in Germany hit
4.225 million, or 10.1% of the working population, the Federal Labour
EURO RECLAIMS THREE-YEAR HIGH
Europe's single currency has climbed to levels not
seen since October 1999 as the US dollar remains under pressure because
of fears over a war on Iraq and the general economic outlook.
The euro hit a three-year high of $1.0535 in late
Asian trade before slipping back to be at $1.0507 at 1025 GMT.
The dollar had strengthened earlier in the week as US
stock markets made some gains fuelled by President George W. Bush's
proposed $674bn economic stimulus package.
Central to his proposals was a elimination of taxes
on corporate dividends for shareholders.
But, Wall Street started its downward trend again as
traders started to fret over a number of major fourth-quarter profit
statements due next week.
CORPORATE WORRIES HIT US STOCKS
Some more gloomy corporate news pushed share prices
lower on Wall Street.
Widening losses at aluminium maker Alcoa and profit
warning from personal computer maker Gateway weighed on the market.
Analysts also said that profit-takers were pulling
the market back following the recent rally over the first three trading
days of the year.
The Dow Jones index eventually closed down 145.28
points, or 1.7%, at 8,595.31.
The gloomy news from the US hit sentiment in Europe.
In London, the FTSE 100 index of leading UK shares
closed down 32.6 points at 3,924.8.
In Frankfurt, the Dax dropped 3.85% to 2,993, while
in Paris the Cac 40 fell 2.1% to 3,094.09.
IMF HEADS FOR ARGENTINA TALKS
The International Monetary Fund (IMF) has said it is
looking forward to an "early finalisation" of a short-term
deal with Argentina.
Following a meeting of its executive board, the IMF
said in a statement that it had recognised "greater economic
stability seen during the second half of 2002".
It added that negotiators would be leaving for Buenos
Aires to start talks.
It is hoped the negotiations will lead to the
rescheduling of part of Argentina's debt.
KOREA VOWS TO PROTECT ITS BOOM
South Korea has unveiled measures to protect its
economy from the threat of friction with North Korea and the fall-out
from any war against Iraq.
The programme, released ahead of a planning meeting
for economic ministers, aims to bolster corporate investment while
curbing household debt.
UK BUSINESS URGES CAUTION ON THE EURO
About half the businesses in the UK want the
government to wait and see how the euro develops before deciding to join
the single currency, a new survey has found.
The British Chambers of Commerce (BCC) said that 49%
of firms wanted Chancellor Gordon Brown to take his time over the issue
even if his five economic tests were satisfied.
The organisation's survey found that 35% would
support joining the euro if the tests were met.
But 13% did not want to be part of the single
currency under any circumstances.
AFGHANISTAN 'TO TOUT ITS COPPER MINES'
Afghanistan is to invite foreign companies to develop
its copper mines by the middle of this year, a report on Radio
Afghanistan has said.
The station quoted the minister of mines as saying
the country would officially invite several international firms to
submit bids for exploration by September this year.
According to Russian estimates, the area holds
reserves of 11 billion tonnes, which would make it the biggest copper
mining area in the world.
UK PROFITS SLUMP TO NINE-YEAR LOWS
The profitability of UK companies has fallen to its
lowest level for nine years.
The Office for National Statistics (ONS) said the
rate of return by private corporations outside the financial service
sector dropped to 11% in the three months to the end of September.
This compared with 11.7% in the previous three months
BRAZIL PLANS PENSION REFORM
Brazil's new President, Luiz Inacio Lula da Silva,
has outlined a timetable for a reform of the pension system — the
biggest single drain on the government's finances.
The president has asked the Pensions Minister,
Ricardo Berzoini, to have a proposal ready to be sent to Congress in
four months' time.